'Pay parents for childcare' plan

Parents "should receive generous financial support"

Parents who stay at home to look after their young children should be paid according to a major new study published on Monday.

The Childcare Commission, led by the former social security secretary Harriet Harman, also wants to see a childcare centre in every area and "generous financial support" for working and non-working parents.

A "toddler tax credit" for parents of children up to three years old and an increase in child benefit for the same age group are among other options put forward.

The year-long study found that many parents who wanted to work were prevented from doing so by inadequate and costly childcare while others who wanted to stay at home with their children could not afford to give up their jobs.

"We know that what is best for the child is for the parent to be able to choose in those early years

Harriet Harman

The commission itself has not put a figure on how much parents should receive for staying at home but some children's groups are hoping it will be as much as £150 a week.

Ms Harman acknowledged that the proposals had not been costed in the study but called on childcare to be recognised as an important area for public funding "alongside transport, hospitals and schools".

"Children are not a lifestyle choice, they are the future of this country, we depend on them," she told the BBC.

"We know that what is best for the child is for the parent to be able to choose in those early years - whether that is going out to work or staying at home."

The report, which drew upon research with parents, children and employers across the country, proposes that under all the options parents would be free to use the money to pay for childcare or to look after their children themselves.

Further proposals put forward include tax relief for childcare on the basic rate of up to £2,000 for childcare expenses and tax breaks to encourage employers to help their employees with childcare.

'Too expensive'

The commission, an independent body set up by the national charity Kids Club Network, included representatives from business and other campaigning groups such as the Day Care Trust.

The report has been criticised by some employers amid fears its provisions would be too expensive and unrealistic to achieve.

The proposal to pay £150 for a parent to stay at home with their child could cost up to £7bn, according to government estimates.

Ruth Lea from the Institute of Directors said: "This will actually fall on taxpayers whether they are individuals or indeed businesses.

"I think there could be some resentment because they will be saying to themselves: 'I will be financing someone else's lifestyle choice'."

Tax relief for childcare would also add hundreds of millions of pounds to the bill, treasury sources have told the BBC.

However Margaret Hodge, Education and Employment Minister, said the government welcomed the report.

"It is a serious contribution to the development of childcare in this country," she said.

"We are doing a lot of what the report is recommending."

The report has been welcomed by Maternity Alliance, the pressure group which campaigns for more rights for young parents.

This ought to be the happiest times of a young couple's life; the reality is that it is a real struggle

Christine Gowdridge Director, Maternity Alliance

Its director, Christine Gowdridge, told BBC Radio 4's Today programme that implementing the report would cost "peanuts" in comparison with the present financial costs borne by the 700,000 couples who become new parents every year.

"At present women are returning to work before they want to because they can't afford to stay off work.

"They are not even using the maternity leave that they got because their income plummets to such a low level.

"This ought to be the happiest times of a young couple's life; the reality is that it is a real struggle.

"It is a completely mad system of maternity leave we have at the moment."

She said the Maternity Alliance would also support statutory provisions that would allow women to go back to work part-time after having a child.